Keep or Toss? Keeping Your Records Straight Pays Off


Every so often, life has a way of throwing some curveballs.

Some are more minor in nature – a fender-bender when you are on your way to the store or a washing machine that suddenly stops working.

And, some are more serious such as a health scare or sudden death of a loved one.

What these situations all have in common though is that each will require you to locate, review, or submit some important papers or information – and to do so in a timely manner.

If you were to find yourself in one of these unexpected life moments, would you know where to find the paperwork you need? Would your vital documents be accessible or are they more likely to be mixed in with other, less-than-important or expired records?

Well, if you would describe yourself as someone who would have to ransack your home looking for looking for a warranty or dig through old tax receipts stored in a shoe box in your closet, you have lots of company.

According to the Consumer Reports National Research Center, one in four Americans have either lost or forgotten a financial document and only 40 percent could locate important documents if needed.

Getting Organized

To help you get organized and sort through the important documents you should have available, we have compiled a list to give some guidance on what records you should keep (and for how long) and what papers you can discard.

Consumer Reports recommends that you divide all of your records into four categories:

1.  Papers you need to keep for a calendar year or less

  • Bank records – reconcile receipts monthly; keep statements needed to prove tax deductions with tax records; shred the rest (If you’re planning to apply for Medicaid, you’ll need five years of statements, which your financial institutions will provide at no charge.)
  • Credit-card bills – reconcile receipts monthly; keep statements needed to prove tax deductions with tax records; shred the rest
  • Current-year tax records – start the year with a file for tax-related documents and save yourself the headache of tracking them down at tax time
  • Insurance policies – when you get your new policies each year, shred the old ones
  • Investment statements – keep the latest ones and shred the rest; save the annual statements until you sell the investments
  • Pay stubs – keep a year’s worth and reconcile them with your W-2, then shred
  • Receipts – shred once you’ve reconciled them to statements; keep if they apply to items listed in #2 below, or if you need them for business deductions

2.  Papers that can be destroyed when you no longer own the items they coverAdobeStock_61396442-300x200

  • Household furnishings paperwork
  • Investment purchase confirmations
  • Loan documents
  • Savings bonds
  • Vehicle records

3.  Tax records

  • Per the IRS, save tax records as follows:
    • Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return
    • Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction

4.  Papers to keep indefinitely

  • Defined benefit plan documents – keep these for both current and former employers
  • Estate planning documents – Wills, trusts, power of attorney, advance directives
  • Life insurance policies – except term, which you should keep until the term is over, then shred
  • Safe deposit box inventory – location, keys, a list of what’s in it

Accessibility and Storage

In addition to knowing how long you should hold on to certain papers, you should also be careful about where you are storing them to ensure they are safe and accessible.

Among the important documents that should be readily available to you are:

  • Birth and death certificates
  • Estate planning documents
  • Life insurance policies
  • Loan documents until you no longer own the item
  • Marriage licenses and divorce decrees
  • Social Security card(s)
  • Vehicle title(s) for vehicles you currently own

There are multiple options for safe storage of vital documents including a safe deposit box, a fire-proof safe in your home, or digital storage. Additionally, some law firms, including Czepiga Daly Pope & Perri, can also safely store your original Will.

With a good plan that’s up-to-date, you’ll be well prepared to manage life’s unexpected circumstances – and, without the added stress of scrambling to find essential documents at the worst possible time.

Related Posts:

How to Store Estate Planning Documents Safely: Here are 4 Options

Death and Money Matters: 4 Key Things to To When a Loved One Dies

How to Transfer a Car After a Death

6 Estate Planning Documents You Should Create Today

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